Within 24 hours, the key crypto currency lost a total of 11 percent in value. BTC is trading at $27,043 at the time of writing — 60 percent below its all-time high of $69,000.
On a weekly basis, things look even bleaker. The key crypto currency lost around 30 percent in value within seven days. After all: In the ranks of the top cryptocurrencies, digital gold is still the best. ETH, BNB, and RXP are being put through a lot more pressure.
The Terra Luna thing
How can the exorbitant price volatility – even by Bitcoin standards – be explained?
Florian Döhnert-Breyer, Managing Director of F5 Crypto, suspects a very specific market participant. We are talking about Terra Luna:
The collapse of the Terra stablecoin UST is considered to be the trigger for the crash of the crypto market, which has been weakening for weeks. We are now in a macro bear trend that has not yet found the bottom. You should stay away from blockchains in the stablecoin area at the moment. We expect a lot of momentum in the market in the coming weeks, in both directions.
Florian Döhnert-Breyer to BTC-ECHO
Terra Luna is a blockchain ecosystem that issues, among other things, the algorithmically secured USD stablecoin UST. In the course of the uncertainties on the market, however, the peg to the US dollar was broken – and brought the entire Terra ecosystem to its knees. The spicy: The Luna Foundation (LFG) is considered one of the largest Bitcoin Hodler ever. Most recently, the foundation tasked with overseeing the peg to the USD held over $3 billion in BTC. Market watchers now fear that the LFG will dump its entire BTC holdings onto the market, further fueling the downtrend.
Is Bitcoin Dead? That’s what the experts say
For some market observers, however, champagne corks are likely to pop today. The last time there were cheaper entry prices than this was in January 2020. Especially with a view to the realized price, i.e. the average price of all BTC ever bought, a really rare entry opportunity is looming here. Since 2014, there have only been three situations where Bitcoin has fallen below the Realized Price (yellow). Each of these situations has turned out to be a lucrative entry level.
BTC ECHO Market Expert: “Bitcoin is Oversold”
BTC-ECHO market analyst Stefan Lübeck also sees the current price level as clearly oversold. The main reason for the market panic is the turmoil on the financial markets:
The Bitcoin course is still in the stranglehold of the international financial markets. The price weakness in the major technology stocks, coupled with the current strength of the US dollar, are depressing the prices of all asset classes. Despite all the negative signs, the technical indicators point to a countermovement in the near future.
Döhnert-Breyer from F5 Crypto also urges prudence. Now is not the time to panic. The market expert says to BTC-ECHO:
The high volatility is attracting more speculators, but there are now opportunities for attractive entry prices for fundamentally well-positioned projects.
Fed sends overall market down
Bitcoin and Co. are particularly troubled by the macroeconomic interest rate environment. With 8.3 percent inflation, the rate of inflation in the USA is higher than it has been since the 1980s. The resulting turnaround in interest rates by the US Federal Reserve fed creates uncertainty in the market and makes investors sell off risky assets such as tech stocks and bitcoin, explains bitcoin market expert and on-chain analyst Jan Wustenfeld on request:
The financial markets are currently in risk-off mode. This means that market participants sell technology stocks, for example, in order to minimize their risk of loss on the market. Since many investors still see Bitcoin as a high-risk investment, the price of Bitcoin also falls as a result.
Jan Wüstenfeld to BTC-ECHO
where is the floor
For a well-timed entry into the crypto market, it is advantageous to determine the “bottom”, i.e. the macro trend reversal, as precisely as possible. Where exactly this will be is difficult to predict, says Wüstenfeld.
It is difficult to say exactly where the price floor will be and in my opinion it still depends in particular on the developments on the financial markets and whether further negative news regarding Luna and the crypto market will push the price down.
And from the Luna front there is currently little positive to report. LUNA is trading at $0.04 at the time of writing – effectively clinically dead.
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